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MAT 142Lecture Video
Series
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Simple Interest
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Objectives
• Calculate the simple interest on a loan. • Calculate the future value of a simple
interest loan. • Calculate the present value of a simple
interest loan given the future value. • Calculate the payments for an add-on
interest loan. • Calculate the average daily balance for a
billing period. • Calculate the finance charges for a billing
period.
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Vocabulary
• present value • principal • future value • interest rate • simple interest • loan amount • maturity value • add-on interest • average daily balance
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Formulas
)1( rtPFV
tI Pr
Simple Interest Future Value Formula
Interest
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Find the simple interest on a loan amount of $35037 at 6% annual interest for 2 years.
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Find the simple interest on a loan amount of $8950 at 9½% annual interest for 10 months.
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Find the simple interest on a loan amount of $5682 at 11¾% annual interest for 278 days.
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Find the future value of $3670 deposited at 2¾% annual simple interest for 7 years.
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Find the maturity value of $2720 borrowed at 12¾% annual simple interest for 275 days.
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Find the present value of a future value $420 at 5½% annual simple interest for 2 years.
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How much must be deposited now at
annual simple interest so that in 2 years and 7 months an account will contain $3000?
%87
5
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Juan Hererra inherited $7,000. He wants to buy a used car, but the type of car he wants typically sells for around $8,000. If his money can earn 6½% annual simple interest, how long must he invest his money?
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Mark and Debbie Smith buy a bedroom set at Fowler’s Furniture for $3,700. They put $500 down and finance the rest through the store at 9.8% add-on interest. If they agree to make 36 monthly payments, find the size of each payment.
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The activity on Jenny Jones’s Sears account for one billing period is shown below. Find the average daily balance and the finance charge if the billing period is March 1 through March 31. The previous balance was $157.14, and the annual interest rate is 21%. March 5 payment $25.00
March 17 tools $36.12
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Creator and Producer
Elizabeth Jones
for
The School of Mathematical and Statistical Sciences
atArizona State University
Videographer
Mike Jones
©2009 Elizabeth Jones and School of Mathematical and Statistical Sciences at Arizona State University